For a little while there, many labour hire providers thought that a licensing regime would not go ahead, as the new Marshall-led Liberal Government indicated that it would seek to will seek to repeal labour hire licensing laws introduced by the previous Labor Government. This was because of concerns about the effectiveness of the scheme and the impact it would have on the state’s workforce. They have not had the power to repeal it because of the lack of support to do so in the currently constituted South Australian parliament. This means that labour hire providers must begin to prepare themselves to be fully compliant with the licensing scheme from 1 November 2019.
However, while the focus is on the labour hire providers, all businesses must be aware of these laws. Why? Because they place obligations on those who obtain services from these agencies.
How Can It Impact My Business?
These laws impact the way organisations engage with labour hire agencies in two ways – firstly, to place the onus on businesses to check that they are properly licensed, and secondly, to ensure that those circumventing licensing are reported as soon as possible.
Part 3 of the Labour Hire Licensing Act 2017 (the Act) states that (amongst other things):
- a person must not enter into an arrangement for the provision of labour hire services with another person who is not authorised to provide such services under a Licence; or
- Enter into an arrangement with another person for the supply of a worker if the person knows, or ought reasonably to know, the arrangement is designed to avoid an obligation under the Act.
Therefore, there is an onus on all businesses to make sure that the labour hire agency that they are using for the provision of labour services has the necessary licences in place. Where an agency does not have those licenses in place, there is exposure of up to $400,000 for a body corporate or $140,000 for an individual, if that agency is used. An individual may also be imprisoned for up to three years.
There are also obligations on businesses to immediately report to the Government instances where a person or business is attempting to avoid their compliance obligations under the law. Failing to make this report could result in an individual being fined $30,000.
How do I know what a labour hire agency is?
Section 7 of the Act states that a person (a provider) provides labour hire services if, in the course of conducting a business, the provider supplies to another person a worker to do work in, and as part of a business or commercial undertaking of the other person.
An individual is a worker under section 8 of the Act if the individual enters into an arrangement with the provider under which:
- The provider may supply, to another person, the individual to do work; and
- The provider is obliged to pay the individual, in whole or part, for the work.
If unsure, please seek legal advice. The scope of the Act is extremely broad and an intends to capture working relationships that may not have been considered as “labour hire” in the past. For example, “secondments”.
Given the ramifications of this legislation, it is important that all businesses do an audit of their labour hire agency arrangements so that, come 1 November 2019, their suppliers of labour hire services are appropriately licensed. In the event that they are not licensed in the lead up to that deadline, they may need to obtain their own legal advice about the impact of failing to obtain these licences – and you may need to reconsider using that particular agency in order to minimise your own risk of penalties.
If you have any further concerns about how these new laws may affect your business, either as a labour hire agency or a business that utilises these services, please contact us.